May WTI Oil Straddling Retracement Zone at $106.12 – $101.32

U.S. West Texas Intermediate crude oil futures are continuing their volatile ways on Thursday, plunging more than $5 a barrel early in the session on news the United States was considering the release of up to 180 million barrels from its strategic petroleum reserve (SPR), the largest in the near 50-year history of the SPR.

At 07:31 GMT, May WTI crude oil futures are trading $102.49, down $5.33 or -4.94%. On Wednesday, the United States Oil Fund ETF (USO) settled at $77.87, down $1.72 or -2.26%.

It seems every day, crude oil traders have to deal with a new fundamental event. This is helping to create the volatility that short-term traders need to flip back-and-forth between long and short biases. But it’s hurting the long-term outlook of the market.

On Thursday, the bearish theme is being fueled by the release of oil from the U.S. SPR. Later today, U.S. President Joe Biden is expected to give remarks regarding his administration’s actions aimed at lowering gasoline prices that have risen to records following Russia’s invasion of Ukraine.

The limited sell-off early Thursday suggests that despite the massive size of the release, it may not be enough to fill the entire short-fall in supply that is helping to drive gasoline prices higher. It may take additional help from other countries to drive crude oil prices substantially lower, but this is a possibility since the International Energy Agency (IEA) member countries are set to meet on Friday to decide on a collective oil release.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart, however, momentum is trending lower. A trade through $116.64 will signal a resumption of the uptrend. A trade through $92.20 will change the main trend to down.

The minor trend is up. A trade through the minor top will indicate the buying is getting stronger. A trade through $98.44 will change the minor trend to down. This will confirm the shift in momentum.

The main range is $61.86 to $126.42. Its retracement zone at $94.14 to $86.52 is controlling the near-term direction of the market. It stopped the selling at $92.20 on March 15.

The intermediate range is $85.81 to $126.42. The market is currently straddling its retracement zone at $106.12 to 101.32.

The short-term range is $126.42 to $92.20. Its retracement zone at $109.31 to $113.35 is a potential upside target and trigger point for an acceleration to the upside.

Daily Swing Chart Technical Forecast

The direction of the May WTI crude oil market on Thursday is likely to be determined by trader reaction to $101.32.

Bullish Scenario

A sustained move over $101.32 will indicate the presence of buyers. If this creates enough upside momentum then look for a labored rally with potential targets coming in at $106.12, $109.31 and $113.35.

Bearish Scenario

A sustained move under $101.32 will signal the presence of sellers. This could trigger a quick break into the minor bottom at $98.44. Taking out this level could trigger an acceleration into the major 50% level at $94.14. This is the last support before the main bottom at $92.20.